Stockholders' Transactions | 12 Months Ended |
Dec. 31, 2013 |
Stockholders' Transactions [Abstract] | ' |
Stockholders' Transactions | ' |
Note 6 - Stockholders’ Transactions: |
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Common and Preferred Stock Transactions: |
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During March and April 2007, the Company issued 368,012 shares of common stock to its founders for $4,564, or $0.0124 per share. |
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During May and June 2007, the Company issued 9,677 shares of common stock to its employees for $120, or $0.0124 per share. During August 2007, the Company issued 18,401 shares of common stock at $0.0124 per share in accordance with the license agreement between the Company and S.L.A. Pharma (see Note 7). During 2007, the Company recorded $228 of stock-based research and development expense in connection with this license. |
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During June through September 2008, the Company issued 18,977 shares of common stock and 3,796 warrants at $60.39 per unit (consisting of a share of common stock with 20% warrant coverage) in connection with a private placement financing at $60.39 per unit. Each warrant has a seven-year term and an exercise price of $66.46. The Company raised $929,457 of net proceeds. |
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During July 2008, the Company issued 29,861 shares of common stock and 6,151 warrants at $60.39 per unit (consisting of a share of common stock with 20% warrant coverage) to related parties in connection with the conversion of amounts outstanding under certain promissory notes. Each warrant has a seven-year term and an exercise price of $66.46. The warrants had a fair value of $340,860 and were expensed on issuance since the promissory notes were converted. |
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The fair value of the warrants granted, mentioned in the preceding paragraph, was based on the following assumptions: |
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Risk-free interest rate | | 3.89 | % | | | | | | | | | | | | | | | | |
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Expected volatility | | 128.18 | % | | | | | | | | | | | | | | | | |
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Expected life of warrants | | 5 years | | | | | | | | | | | | | | | | | |
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Expected dividend yield | | 0 | % | | | | | | | | | | | | | | | | |
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During December 2009, the Company issued 2,016 shares of common stock to S.L.A. Pharma pursuant to an amendment to the license agreement between the Company and S.L.A. Pharma, and 403 shares of common stock to a vendor, each at a value of $12.40 per share, recording an expense of $25,000 and $5,000 to research and development expense, respectively. |
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In connection with the Company’s IPO, all of the issued and outstanding convertible notes issued in 2007 and 2010 converted into shares of common stock pursuant to the terms of those notes. All principal and accrued interest on the 2007 and 2010 convertible notes converted at per share price of $4.20, which was 70% of the public offering price of $6.00 per share in the IPO, resulting in an aggregate of 1,642,802 shares of common stock issued upon conversion of the 2007 convertible notes and an aggregate of 1,421,834 shares of common stock issued upon conversion of the 2010 convertible notes. Also in connection with the IPO, and pursuant to their terms, the promissory notes issued to Paramount BioSciences, Inc. and Capretti Grandi LLC, were converted at a per share price of $4.20, which was 70% of the public offering price of $6.00 per share in the IPO, resulting in an aggregate of 269,449 shares of common stock issued upon conversion of these notes. |
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On December 22, 2010, the Company issued 2,900,000 shares of its common stock in an IPO at $6.00 per share and received net proceeds of $15,184,344, after deduction of underwriting discounts, commissions and other expenses related to the IPO. |
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Pursuant to the terms of the license agreement between the Company and S.L.A Pharma, the Company was obligated to issue to S.L.A. Pharma that number of additional shares of common stock so that, when added to the 18,401 shares initially issued, the new and old shares had an estimated fair market value equal to $500,000 (based on the price per share paid in the financing). The closing of the Company’s IPO triggered this obligation. As a result, the Company issued 64,933 shares of its common stock to S.L.A. Pharma on December 22, 2010. The Company valued the stock issuance to S.L.A. Parma at $389,597 and expensed the full amount to research and development expense as of December 31, 2010. |
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On January 7, 2011, the Company issued 435,000 shares of its common stock to fulfill the over-allotment option that it granted to the underwriters as part of the IPO and raised net proceeds of $2,420,776. |
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During the twelve months ended December 31, 2011, the Company issued an aggregate of 50,034 shares of common stock pursuant to the exercise of warrants with an average exercise price of $5.77. |
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On July 19, 2011, the Company issued 5,175,000 shares of its common stock in an underwritten public offering and raised net proceeds of $47,568,047. |
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The Company filed a shelf registration statement with the Securities and Exchange Commission, which became effective on February 10, 2012, under which it may offer shares of its common stock and preferred stock, various series of debt securities and/or warrants to purchase any of such securities, either individually or in units, in one or more offerings, up to a total dollar amount of $100,000,000. As part of the shelf registration statement, the Company included a prospectus for an at-the-market common equity sales program for the sale of up to $20,000,000 of common stock. In May and June 2012, the Company sold an aggregate of 354,700 shares under this program, resulting in net proceeds of approximately $4,166,000, or $11.75 per share. In February 2013, the Company sold an aggregate of 6,670,000 shares of common stock and 220,000 shares of Series A Non-Voting Preferred Stock, which are convertible into 2,200,000 shares of common stock, under the shelf registration statement, resulting in net proceeds of approximately $20,800,000. In September 2013, the Company amended its at-the-market sales agreement to cover the sale of up to $20,521,567 of common stock in addition to what had been sold previously. In September and October 2013, the Company sold an aggregate of 1,129,545 shares of common stock under the amended at-the-market common equity sales program, resulting in net proceeds of approximately $3,600,000, or $3.20 per share. As of December 31, 2013, an aggregate of approximately $75,000,000 worth of securities was available under the shelf registration statement out of which approximately $16,900,000 of common stock was available for the at-the-market common equity sales program. |
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See Note 10 for transactions subsequent to December 31, 2013. |
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Common Stock Options and Warrants: |
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Stock Options: |
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In 2007, the Company established a stock incentive plan (the “2007 Plan”) under which incentive stock and/or options could be granted to officers, directors, consultants and key employees of the Company for the purchase of up to 483,871 shares of the Company’s common stock. The options could have a maximum term of ten years, vest over a period to be determined by the Company’s Board of Directors and have an exercise price at or above fair market value on the date of grant. |
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There were no options issued under the 2007 Plan in 2008 or 2009. |
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On May 11, 2010, the Company granted options to purchase 2,016 shares of its common stock to a director under the 2007 Plan with an exercise price of $6.00. The Company valued these options at $9,714 and expensed the full amount on the grant date since the options were fully vested. |
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The Company terminated the 2007 Plan in July 2010, but the 2,016 options granted under the 2007 Plan remain outstanding. |
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In August 2010, the Company’s stockholders approved the 2010 Equity Incentive Plan (the “2010 Plan”). In May 2011, the Company’s stockholders approved an amendment to the 2010 Plan to increase the shares reserved for issuance from 2,467,200 to 3,967,200 shares of the Company’s common stock. The 2010 Plan authorizes the Company to issue equity incentive awards in the form of shares, options or other awards based on Ventrus common stock as part of an overall compensation package to provide performance-based compensation to attract and retain qualified personnel. |
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In November 2010, the Company granted options to non-employee directors to purchase an aggregate of 160,000 shares under the 2010 Plan. In addition, under Dr. Ellison’s and Mr. Barrett’s respective employment agreements, in connection with the closing of the Company’s IPO, the Company granted to Dr. Ellison and Mr. Barrett options under the 2010 plan to purchase shares of the Company’s common stock with an exercise price of $6.00, which was equal to the initial public offering price per share, in an amount equal to 7.5% (573,599 shares) and 4.0% (305,920 shares), respectively, of the Company’s fully diluted capitalization on that date. |
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In 2011, the Company granted options to purchase 30,000 shares to three of its directors, options to purchase an aggregate of 552,440 shares to four employees and options to purchase an aggregate of 384,240 shares to seven consultants, all pursuant to the 2010 Plan with exercise prices at or greater than the then market value of the Company’s common stock ($6.00 - $15.77 per share). |
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In 2012, the Company granted options to purchase 35,000 shares to a new director and 228,000 options to purchase shares to eight employees which included three new employees. Additionally, the company granted options to purchase an aggregate of 162,740 shares to seven consultants all pursuant to the 2010 Plan. The exercise prices of the options granted were at the then market value of the Company’s common stock ($3.60 - $10.62 per share). |
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In 2013, the Company granted options to purchase 30,000 shares to three directors and 500,000 options to purchase shares to five new employees. The exercise prices of the options granted were at the then market value of the Company’s common stock ($2.47 - $3.31 per share). |
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A summary of the Company’s option activity under its option plans and related information is as follows: |
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| Year Ended | Year Ended | |
December 31, 2013 | December 31, 2012 |
| Shares | | Weighted | | Aggregate | Shares | | Weighted | | Aggregate | |
Average | Intrinsic | Average | Intrinsic |
Exercise | Value | Exercise | Value |
Price | | Price | |
Outstanding at beginning of period | | | 1,878,475 | | $ | 6.72 | | $ | - | | | 2,046,455 | | $ | 6.4 | | $ | - | |
Granted | | | 530,000 | | $ | 2.88 | | $ | - | | | 425,740 | | $ | 7.64 | | $ | - | |
Exercised | | | - | | $ | - | | | - | | | -168,240 | | | 6.11 | | | - | |
Forfeited | | | -69,984 | | $ | 7.6 | | $ | - | | | -425,480 | | | 6.64 | | | - | |
Outstanding at end of year | | | 2,338,491 | | $ | 5.87 | | $ | | | | 1,878,475 | | $ | 6.72 | | $ | - | |
Options exercisable at end of period | | | 2,322,518 | | $ | 6.31 | | $ | - | | | 1,618,820 | | $ | 6.51 | | $ | - | |
Vested or expected to vest at December 31 | | | 2,338,491 | | | - | | | - | | | 1,878,475 | | | - | | | - | |
Shares available on December 31 for options that may be granted | | | 1,390,485 | | | - | | | - | | | 1,920,485 | | | - | | | - | |
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Included in the options exercised in 2012 were 100,000 options exercised in a cashless exercise for 47,550 shares of common stock. |
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The Company expects that all outstanding unvested options will vest. The fair value of the options granted for the year ended December 31, 2013 and 2012, was based on the following assumptions: |
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| | 2013 | | | 2012 | | | | | | | | | | | | |
Risk-free interest rate | | | 1.23%-2.34 | % | | | 1.11%-1.32% | | | | | | | | | | | | |
Expected volatility | | | 59.32%-77.34 | % | | | 76.31%-78.23% | | | | | | | | | | | | |
Expected life of options | | | 7 years | | | | 7 years | | | | | | | | | | | | |
Expected dividend yield | | | 0 | % | | | 0% | | | | | | | | | | | | |
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Estimated future stock-based compensation expense relating to unvested stock options (for consultants based on the fair value at December 31, 2013) is as follows: |
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Years Ending December 31, | | Future Stock Option | | | | | | | | | | | | | | | | |
Compensation | | | | | | | | | | | | | | | |
Expense | | | | | | | | | | | | | | | |
2014 | | | 682,701 | | | | | | | | | | | | | | | | |
2015 | | | 275,820 | | | | | | | | | | | | | | | | |
2016 | | | 196,419 | | | | | | | | | | | | | | | | |
2017 | | | 20,239 | | | | | | | | | | | | | | | | |
Total estimated future stock-based compensation expense - stock options | | $ | 1,175,179 | | | | | | | | | | | | | | | | |
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The weighted average remaining contractual life of options outstanding at December 31, 2013 is approximately 7.25 years. |
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Stock-based compensation expensed to research and development expense for the years ended December 31, 2013 and 2012 was $695,636 and $846,508, respectively. Stock-based compensation expensed to general and administrative expense for the years ended December 31, 2013 and 2012 was $1,017,311 and $2,324,585, respectively. |
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Warrants: |
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During 2007, the Company granted 12,903 warrants to various consultants with an exercise price of $7.69 per share. Each warrant granted during 2007 vests equally over a three-year period and has a seven-year term. During 2008, 1,613 of these warrants were forfeited due to the consultant’s relationship with the Company ending prior to the vesting period. All of the warrants that remain outstanding were fully vested at December 31, 2010. |
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On August 30, 2010, the Company issued a warrant to purchase 13,605 shares of its common stock with an exercise price of $1.24 per share to S.L.A. Pharma (see Note 7) pursuant to an amendment to the license agreement between the Company and S.L.A. Pharma. The warrant was fully vested at issuance and the Company recognized the full amount of $161,552 of stock-based research and development expense as of December 31, 2010. |
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In connection with the Company’s financings in 2007, 2008, 2009 and 2010, the Company issued warrants to investors and/or placement agents to purchase shares of common stock as well as certain consulting warrants (See Note 8). |
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A summary of the Company’s warrant activity and related information is as follows: |
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| | Year Ended | | Year Ended | | | | | | | |
31-Dec-13 | December 31, 2012 | | | | | | |
| | Shares | | Weighted | | Shares | | Weighted | | | | | | | |
Average | Average | | | | | | |
Exercise Price | Exercise Price | | | | | | |
Outstanding at beginning of period | | 874,651 | | $ | 7.67 | | | | 956,443 | | $ | 7.61 | | | | | | | |
Granted | | - | | $ | - | | | | - | | $ | - | | | | | | | |
Exercised | | - | | $ | - | | | | 81,792 | | $ | 7 | | | | | | | |
Expired | | 13,605 | | $ | 1.24 | | | | - | | | - | | | | | | | |
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Outstanding at end of year | | 861,046 | | $ | 7.77 | | | | 874,651 | | $ | 7.67 | | | | | | | |
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Warrants exercisable at end of period | | 861,046 | | $ | 7.77 | | | | 874,651 | | $ | 7.67 | | | | | | | |
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Included in the warrants exercised are 35,958 warrants exercised in a cashless exercise for 11,620 shares during the year ended December 2012. All outstanding warrants have vested and no additional expense is expected to be recorded in the future years. |
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Common Stock Grant: |
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On April 5, 2013, the Company granted restricted stock units to four employees under the 2010 Plan for an aggregate of 500,000 shares of common stock. Of these units, 25% vested immediately at the grant date. The remaining 75% of the units will vest in equal 25% tranches if the 20 trading day volume-weighted average price of our common stock as reported on the NASDAQ Capital Market is at least $4.15, $5.15 and $6.15, respectively . The performance period for the unvested restricted stock units ends on June 30, 2016; if one or more of the stock price thresholds are not met by that date the unvested units will expire. Each employee elected to defer receipt of all shares issuable under the units, including the immediately vested shares, until the earliest of termination of employment, a change in control of Ventrus, or April 1, 2015. The restricted stock units were issued to employees and officers at a price equal to the market price of the Company’s stock at the date of grant. The Company estimated the fair value of the restricted stock units using the Monte Carlo valuation model with the following assumptions; volatility of 56.10% , risk free interest rate of 1.934%, and dividend rate of 0%. The total estimated fair value of the restricted stock units is approximately $1,135,000. Compensation costs for restricted stock award are being recognized on a straight-line basis over the performance period. The first 25% of restricted stock was immediately expensed. |
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A summary of the status of our restricted stock units as of December 31, 2013 is as follows: |
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| Year Ended December 31, 2013 | | | | | | | | | | | | | |
| | | | | Weighted Average | | | | | | | | | | | | | |
| Shares | | Grant Date Fair Value | | | | | | | | | | | | | |
Per Share | | | | | | | | | | | | |
Restricted stock units as of January 1, 2013 | | | 0 | | $ | - | | | | | | | | | | | | | |
Granted April 5, 2013 | | | 500,000 | | $ | 2.27 | | | | | | | | | | | | | |
Shares vested and issuable | | | -125,000 | | $ | 2.95 | | | | | | | | | | | | | |
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Restricted stock units as of December 31, 2013 | | | 375,000 | | $ | 2.04 | | | | | | | | | | | | | |
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